Court of Appeal confirms mobile provider is a "mere witness" for the purpose of NPO application

• United Kingdom

• Litigation and dispute management - Norwich Pharmacal Orders

10-02-2022

EUI Ltd v UK Vodaphone Ltd [2021]

Facts of the Case

• An insurance company (A) issued a home insurance policy to a customer (D) and was paying displacement costs (i.e. the cost of alternative accommodation) to him after flooding at his home address. As D was staying with relatives, the policy capped displacement costs at £1,000 per month, which sum was paid out throughout the summer of 2019.

• Towards the end of 2019, D informed A that he would be renting a house for £1,850 per month. A made payments covering this rent from December 2019 to May 2020.

• A subsequently became concerned as to the legitimacy of the new tenancy and suspected that it was ploy to circumvent the £1,000 cap, including because of inconsistent statements about the location of D’s relatives.

• In November 2020, A applied for a Norwich Pharmacal Order (NPO) against Vodaphone, in an attempt to obtain mobile phone data to establish the location of D’s mother. A believed this would prove fraud had been committed by D.

• The High Court refused to grant a NPO and A appealed to the Court of Appeal. This briefing focuses on the Court of Appeal’s decision.

The Decision

• Applying the criteria for the exercise of the NPO jurisdiction set out by Lightman J in Mitsui & Co Ld v Nexen Petroleum [2005] EWHC 625 (Ch), the Court of Appeal upheld the decision of the High Court¹.

• This was principally because it rejected the argument that Vodaphone’s position was beyond that of “mere witness”, and which was based on its products having enabled D to claim to be living at one address whilst in fact living at another.

Analysis and Practical Advice

• NPOs are often sought against banks where (i) their accounts have been used, without the knowledge of the bank, to facilitate wrong-doing (such as receiving and transferring the proceeds of crime) and (ii) the identity of those that have benefitted or assisted this activity cannot be known by the applicant without disclosure of account information by the bank.

• However the court will not order discovery pursuant to the NPO jurisdiction simply on the basis that the defendant can give relevant information as to the identity of a wrongdoer. Instead, the defendant must inter alia be more than a “mere witness” or “bystander”, such that justice requires that they should co-operate in righting the wrong they unwittingly facilitated.

• In this case, Vodaphone had not been mixed up in or drawn into the wrongdoing. While the phone records might have assisted in establishing the truth of the relative’s whereabouts, Vodaphone’s position was no different from anyone else who might be able to provide evidence about that issue, e.g. the mother’s neighbours.

• Furthermore, A could adequately plead its case without an NPO, as the identity of D was already known and it possessed other critical information, e.g. the evidence of the inconsistencies in D’s statements, and the fact that D had received and retained the higher level of compensation.

• An alternative for A would have been to seek the information by way of a third party disclosure order against Vodaphone under CPR 31.17. That however would have required proceedings against D to be on foot first (which they were not), and A would also have had to satisfy the different test that the information was “necessary in order to dispose fairly of the claim”.

(i) A wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer; (ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and (iii) the person against whom the order is sought must (a) be mixed up in so as to have facilitated the wrongdoing and (b) be able or likely to be able to provide the information necessary to enable the wrongdoer to be sued.

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